Rockley Photonics files for bankruptcy, triggering NYSE delisting

Rockley Photonics, the wearable sensor maker that has formed high-profile partnerships with the likes of Apple and Medtronic, filed for Chapter 11 bankruptcy this week, following months of slipping stock prices and mounting debts.

In the bankruptcy petition filed in New York on Monday, Rockley asked to be allowed to proceed as a “debtor in possession,” according to an 8-K filing (PDF) with the U.S. Securities and Exchange Commission on Tuesday. That would allow the tech developer to continue operating without interruption.

Additionally, Rockley said in the SEC filing that it has devised a reorganization plan that aims to eliminate debt and restructure its capital makeup, moves that the company said would add $35 million in cash to support its ongoing operations.

Alongside the bankruptcy filing, Rockley’s stock was immediately halted from further trading on the New York Stock Exchange on Monday afternoon, and the exchange said in a statement that it would begin proceedings to fully delist the stock. Though Rockley has the right to appeal the delisting, the company said in its 8-K filing that it did not intend to do so.

According to the NYSE, its delisting decision was based in part on the fact that Rockley’s proposed reorganization plan suggested that all existing shares would be “canceled, extinguished and released” once the plan goes through.

Even before filing for bankruptcy, Rockley was already dangerously close to being kicked off the NYSE. The company received its first warning from the exchange in October, after its stock price had failed to rise above $1 for 30 trading days, and was given six months to regain compliance or face delisting. That was followed by another notice in December when the NYSE informed Rockley that it had failed to meet another trading requirement, this one stating that companies maintain both an average market cap and stockholders’ equity of at least $50 million; Rockley was given 18 months to meet that standard.

In the months since the first threat of NYSE delisting, however, Rockley’s stock price only continued to plummet: The first notice was issued on Oct. 18, when its stock was trading at about 57 cents, and by the start of this week, it had slipped down to just 19 cents per share.

According to its most recent financial report (PDF)—which was issued after the third quarter of last year—as of Sept. 30 Rockley had racked up more than $120.7 million in liabilities, spanning its long-term debt, accrued expenses and more. That’s more than double the amount owed at the end of 2021, when Rockley reported just over $59 million in liabilities.

The company took on around $120 million in short-term debt last year, comprising $29.3 million of convertible senior secured notes issued last May and another $90.6 million issued at the end of October. Under the terms of those loan agreements, all principal, accrued and unpaid interest and other required payments are now “immediately due and payable” following the Chapter 11 filing, according to the 8-K report.

Elsewhere in the third-quarter financial report, Rockley posted a net loss of about $152 million—comparable to where the company stood at the same point the previous year—with year-to-date revenues of just $3 million, down from the $5.8 million Rockley had earned in the first three quarters of 2021.

At the time, the tech maker said it was taking “aggressive steps” to reduce cash burn, including cutting down on both its operational spending and the size of its staff. Shortly after, in early December, founder Andrew Rickman, Ph.D., resigned as CEO and was replaced by CFO Richard Meier.